In March 1982, Moody's Lowered Its Rating for City of Indianapolis

question 10

Multiple Choice

In March 1982, Moody's lowered its rating for City of Indianapolis debt from Aaa to Aa. Which of the following would result from that change?

• A) The interest that Indianapolis has to pay on debt issued before the rating change will increase.
• B) The interest rate that Indianapolis can expect to pay on new debt issues will rise.
• C) The interest paid by Indianapolis will no longer be excluded from federal income taxes.
• D) The new speculative rating means that banks must clear their investment portfolios of this debt.

Determine the net cash provided by (used in) operating activities.

Analyze the impact of capital expenditures and cash dividends on cash flow.

Calculate a company's free cash flow.

Recognize the effects of transactions involving property, plant, and equipment on cash flows.

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Definitions:

Demand

The desire and ability of consumers to purchase goods and services at given prices.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price within a specific time period.

Demand Curve

A graphical representation showing the relationship between the price of a good or service and the quantity demanded at various prices.

Quantity Demanded

The specific amount of a good or service consumers are willing to buy at a given price point, holding all else constant.